How to Loan to Your Friends and Relatives The Right Way

There is an old saying: if you want to lose a friend, loan him or her money. It tells a truth, it is very hard to loan to a friend or a relatively the right way.

So what you should do when loan to your friends and relatives?

Instructions

1. First, you should be prepared to say goodbye to that money forever.

   Since you are lending to a friend or a relatively, it is nearly impossible for you to ask for the money back, when that person intentionally or unintentionally forgets about the loan. So just lend to your friends or relatives the money that you can afford to lose.

2. Second, if you don't really want to lose that money, be prepared to sign more than a gentlemen's agreement.

   You should have an agreement drafted with detailed spelled out - amount of loan, terms of the loan, what interest rate, when is the due time, what is the penalty if not paid back in time. Notorize the agreement once signed by both parties.

3. Most importantly, instead of loaning to a friend or a relatively, lend a helping hand by helping that person to find a way to earn his or her own money. If that person is your own child, that is actually part of your duty as a parent.